Allowing people to dip into their superannuation has been altogether a wrong concession. The Australian Government has gotten this wrong.
The site allowing people to transact withdrawals was poorly set up. Checks and balances to establish the genuineness of inquiry were not adequate, enabling scanners to access accounts and organise withdrawals. There will be a substantial amount of money government will have to fund for reimbursement if faked withdrawals.
The allowance of withdrawal of funds from superannuation accounts was “to make ends meet” but two thirds of the expenditure has been on lifestyle and discretionary expenditure.
“Australians dipping into their superannuation nest-egg during the coronavirus crisis have spent nearly $3000 more than normal in the fortnight after receiving the lump sum and about two-thirds of the additional purchases were on non-essentials including gambling, alcohol and furniture.” SMH 1/6
Eligibility criteria has been loose, encouraging over 1.5 million people to dip into their super savings. This decision will return to haunt them in years to come.
It will be the taxpayer who will have to pay by way of contributing to the pensions of those who, in 2019-20 and 2020-21 withdrew up to $20,000 from superannuation accounts. They are going to sustain exponential losses in terms of compounding interest that has been forgone.